In this article, we take a look at 14 cheap quarterly dividend stocks to buy. If you want to see more cheap quarterly dividend stocks to buy, go directly to 5 Cheap Quarterly Dividend Stocks to Buy.
Quarterly dividend stocks are stocks that pay dividends each quarter.
Companies pay dividends as a way to return excess capital back to shareholders. If a company's profit increases substantially, many companies will increase their dividend in good times. In more challenging or difficult times, company profits could decline or go negative and many companies will cut or suspend their dividends.
Cheap stocks are stocks that trade for below what they normally would be worth for various reasons. Given what is an attractive valuation can change depending on a stock's specifics, sector fundamentals, and broader economic factors that change all the time, there isn't a single indicator such as forward P/E that tells whether a stock is cheap or not.
Instead, the best cheap stocks to buy are arguably blue chip stocks with substantial competitive advantages and also growth potential that are trading for fair or low valuations. Blue chips are established companies with competitive advantages that are well known and generally are pretty profitable. For those of you interested, check out 10 Best Blue Chip Stocks to Buy According to Hedge Funds.
Given the recent failure of Silicon Valley Bank and several other banks, the stock prices of many leading blue chip stocks in financial sector have declined. As a result, some leading financial blue chip stocks that are the leaders in their sectors could be trading at attractive valuations in the long term if economic conditions normalize. Financial stocks may have near term downside risk, however, if more banks fail or if the economy slows more than expected.
For some companies such as Microsoft Corporation (NASDAQ:MSFT) and ASML Holding N.V. (NASDAQ:ASML), the stocks trade for higher forward P/E ratios but are still nevertheless considered cheap given their growth potential due to the growth of AI.
According to Goldman Sachs, generative AI could eventually increase annual global GDP by 7% at some point in the future with productivity increases.
If AI continues to improve, AI could potentially increase the production and services significantly further in the long term.
As a result of AI's potential, demand for semiconductors which are needed to power AI will likely increase and essential semiconductor equipment manufacturer ASML Holding N.V. (NASDAQ:ASML) which is at least several years ahead of its competition will likely benefit from the increases in demand. For those of you interested, check out 10 High Growth AI Stocks to Buy.
Similarly, Microsoft Corporation (NASDAQ:MSFT) will likely benefit from the growth in AI given it can incorporate AI into much of its software to make it more useful. Microsoft Corporation (NASDAQ:MSFT) can also benefit from AI given it owns a leading cloud business that can power many AI applications as well. AI like ChatGPT currently still makes mistakes which limits its effectiveness, but the AI is improving and will improve further in the future.
Given any sector can change substantially in the future and any single company can fall behind for a variety of reasons, it could be a good idea for long term investors to own a well diversified portfolio of leading stocks across many different sectors.
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Methodology
For our list of 14 Cheap Quarterly Dividend Stocks to Buy, we picked 14 stocks with competitive advantages and growth potential that arguably trade for arguably attractive valuations.
We ranked each stock based on the number of hedge funds in our database of 943 funds that owned shares in the same stock at the end of Q4.
The Southern Company (NYSE:SO) is a utility that ranks #14 on our list of 14 Cheap Quarterly Dividend Stocks to Buy given 26 hedge funds in our database of 943 funds owned shares of the stock at the end of Q4.
As a leading utility, The Southern Company (NYSE:SO) has a relatively stable business that has allowed the company to pay a quarterly dividend either equal or greater than the previous quarter for three quarters of a century. The Southern Company (NYSE:SO) has also had sustained dividend increases for over 20 years, giving it a dividend yield of 3.92% as of 3/29. As of the same date, The Southern Company (NYSE:SO) has a forward P/E of 17.22.
Although technology changes could eventually mean The Southern Company (NYSE:SO) might have to change its business model in the long term especially in natural gas distribution, the company's adjusted earnings are expected to grow in the medium term given $43 billion capital plan with 97% of total projected capital deployment over the next five years at its state regulated utilities.
Duke Energy Corporation (NYSE:DUK) is another leading utility with a fairly high dividend yield that's trading for a fairly attractive valuation given its fundamentals. As of 3/29, Duke Energy Corporation (NYSE:DUK) has a forward P/E ratio of 16.09 and a dividend yield of 4.18%, giving it a lower valuation and higher dividend yield than its peer, The Southern Company (NYSE:SO). During the company's Q4 2022 earnings call, Duke Energy Corporation (NYSE:DUK) management reaffirmed 5% to 7% growth rate through 2027 off the midpoint of its 2023 range of adjusted earnings per share of $5.55 to $5.75 per share. Long term, Duke Energy Corporation (NYSE:DUK)'s business model may need to change given technology changes that could affect natural gas distribution demand.
BlackRock, Inc. (NYSE:BLK) is a leading asset manager with a 3.04% dividend yield as of 3/29. Given the decline in many financial stocks in recent months, BlackRock, Inc. (NYSE:BLK) is trading for a forward P/E of 16.47 despite its further AUM growth potential in the future. In the last five years, the company has had an aggregate of $1.8 trillion in net inflows, ranking among the top in the industry. Given its earnings growth over the years, BlackRock, Inc. (NYSE:BLK) has increased its annual dividend for 14 straight years.
Blackstone Inc. (NYSE:BX) is the world's largest alternative asset management firm with attractive margins and substantial earnings power. Since the beginning of 2022, Blackstone Inc. (NYSE:BX) shares have declined due to higher interest rates which make buying companies harder with debt. With weakness among some regional banks in recent months, the commercial real estate market could face headwinds and the weakness could potentially negatively affect Blackstone Inc. (NYSE:BX) in the near term as well. While the near term is uncertain depending on how the economy and markets do, Blackstone Inc. (NYSE:BX) is attractive in the long term given its high quality business, a forward P/E ratio of 13.6, and a dividend yield of 5.17% as of 3/29.
10. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 55
Dividend Yield as of 3/29: 3.28%
The Bank of New York Mellon Corporation (NYSE:BK) is a leading asset management firm whose stock has declined in March given the weakness in many leading financial blue chip stocks as a result of the failure of Silicon Valley Bank. As a result of the stock's decline, The Bank of New York Mellon Corporation (NYSE:BK) arguably trades for a cheap valuation given its attractive business, forward P/E of 8.33, and dividend yield of 3.28% as of March 29. The Bank of New York Mellon Corporation (NYSE:BK) has raised its annual dividend for 11 straight years and the bank has long term growth potential if the broader market recovers.
55 hedge funds in our database owned shares of The Bank of New York Mellon Corporation (NYSE:BK) at the end of Q4, ranking the stock #10 on our list of 14 Cheap Quarterly Dividend Stocks to Buy.
ASML Holding N.V. (NASDAQ:ASML) is a leading semiconductor equipment manufacturer that is at least several years ahead of its competitors in making EUV lithography systems which are essential for making advanced semiconductors. Although ASML Holding N.V. (NASDAQ:ASML) has a forward P/E ratio of 27.25 and a dividend yield of 1.51% as of 3/29, demand for advanced semiconductors is expected to grow substantially in the long term, and demand for ASML Holding N.V. (NASDAQ:ASML)'s products could also grow substantially if it maintains its market share, making the stock cheap in terms of its long term potential.
The Home Depot, Inc. (NYSE:HD) shares are down over 10.29% year to date and have a forward P/E ratio of 16.85 as of March 29 given the sluggish growth expected in the home improvement industry this year. As a result of the sluggishness, The Home Depot, Inc. (NYSE:HD) sees sales growth and comparable sales growth for fiscal 2023 to be approximately flat compared to fiscal 2022. Despite the headwinds, The Home Depot, Inc. (NYSE:HD)'s board of directors in February 2023 authorized a 10% increase in the quarterly dividend to $2.09 per share, which equates to an annual dividend of $8.36 per share.
Oracle Corporation (NYSE:ORCL) is a leading enterprise software company with a forward P/E of 16.24 as of March 30 that has in recent years benefited from the growth in its Oracle Cloud Infrastructure business. While the company's cloud business could have more long term growth given the increase in demand for AI processing, Oracle Corporation (NYSE:ORCL)'s cloud business could be disrupted in the near term if U.S. Congress bans TikTok, which uses Oracle's cloud for its US traffic. Oracle Corporation (NYSE:ORCL) may also have an opportunity in TikTok in that the company is large enough to potentially bid for it.
Lowe's Companies, Inc. (NYSE:LOW) is another leading home improvement retailer that is trading for a fairly low valuation given the quality of its business and its growth potential in the long term. As of March 30, Lowe's Companies, Inc. (NYSE:LOW) has a forward P/E of 13.03, making the stock potentially attractive in the long term if demand for the home improvement retailer's products grows again. In Q3 of 2022, Lowe's Companies, Inc. (NYSE:LOW) was one of the stocks with the biggest buybacks. For those of you interested, check out 10 Stocks with the Biggest Buybacks for stocks with the biggest buybacks in Q3 of 2022.
68 hedge funds in our database owned shares of Lowe's Companies, Inc. (NYSE:LOW) at the end of Q4, ranking the stock #6 on our list of 14 Cheap Quarterly Dividend Stocks to Buy.
